Blogue

20 November 2020

Par PRATTE
Markets are slightly lower

 

 

 

 

 

 

Market Brief

Wall Street started the week up, due to Moderna’s announcement of their new vaccine which should be effective at 94%. This is important news as the second wave continues to hit countries around the world. Markets seem to have been fuelled lately by news surrounding COVID-19 treatments and vaccines, while last week’s vaccine announcements from Pfizer and BioNTec made the markets go up.

The Dow ended the session with gains of 1.60% and the S&P 500 was up 1.16%, both reaching new highs, as the NASDAQ gained 0.80%. Stocks from sectors that were the most affected by the pandemic have also benefited from the announcement surrounding the new vaccine. For example, United Airlines accumulated gains of 5.16%, Carnival jumped 9.74% as hotel and casino group MGM Resorts International advanced 2.36%. Moderna meanwhile ended the session with gains of 10%.

However, stocks that benefited greatly from the shutdown all retreated on Monday. Netflix ended the session down 0.8% and Zoom, the big winner of the pandemic, was down 1.19%.

Wall Street opened lower on Tuesday, taking a break in the aftermath of a record session. The Dow fell 353 points, or 1.2%, the S&P 500 lost 0.8% while the NASDAQ lost 0.2%. Stocks of several large pharmaceutical stores were in the red at the opening after Amazon launched its new service, Amazon Pharmacy. Among other things, this will allow Prime subscribers to have access to free home delivery of their medication. Walgreens stock was down 8.7%, CVS was down 7.5% while Amazon’s stock was up 1%. Tesla stock was up 11% at the opening after announcing the company would enter the S&P 500 on December 21.

The three main indexes ended the session lower, led by declines in Home Depot (-2.5%), Walmart (-2%), CVS (-8.6%) and Walgreen (-9.6%). In contrast, Tesla’s stock performed well once again with gains of 8.21%.

The announcement of Pfizer’s latest vaccine data on Wednesday gave strong support to markets. According to the latest comprehensive results of their large-scale clinical trial, the efficacy of the vaccine developed by Pfizer/BioNTech companies, which will be used to limit the spread of the virus, is 95%. The Dow opened 70 points higher, the S&P 500 opened without direction and the NASDAQ gained 0.1%. Boeing’s stock rose more than 4% after the United States announced it would allow the 737 MAX to fly again, nearly two years after it came to rest following two crashes that caused more than 346 dead.

The three main indexes, however, closed the session lower; the Dow and the S&P 500 fell 1.16% while the NASDAQ lost 0.82%. Late in the morning, news of the closure of public schools in New York City sent the markets down. “At the same time that (the school closings) were announced, the market started to go down, as that obviously gave people the impression that if these closures do occur, maybe more will follow,” said Michael Currie, Vice President and Investment Advisor at TD Wealth Management. “And obviously that’s bad enough for economic activity.”

Wall Street opened lower Thursday, as the winds of optimism from earlier this week after the announcements regarding vaccines dissipated, giving way to fears surrounding the second wave of cases which continue to rise around the world.

According to a report released Thursday, the IMF says that despite progress surrounding a possible vaccine, high asset prices indicate a disconnection from the real economy and a potential threat to financial stability.

“As global economic activity has picked up since June, there are signs that the recovery could lose momentum, and the crisis is likely to leave deep and uneven scars,” Washington-based IMF officials said. “The uncertainty and the risks are exceptionally high.”

All three major indexes ended the session slightly higher on Thursday as investors rushed to technology stocks. The Dow ended the session with gains of 44 points after falling 200 points in the middle of the day. The NASDAQ gained 0.9% and the S&P 500 advanced 0.4%. Tech stocks also had a good session; Netflix closed with gains of 0.6%, Amazon of 0.4%, Apple of 0.5% and Facebook of 0.4%.

Wall Street opened lower on Friday as the number of coronavirus cases continued to rise in the United States raising doubts about a swift economic recovery.

“The volatility this week has been mostly attributed to the increase in coronavirus cases in the United States and the closure of schools in New York. In addition, the disagreement between the Treasury Department and the Federal Reserve on the continued funding of some of the emergency programs implemented during the pandemic has also added to investor fears” adds our president and portfolio manager, Philippe Pratte.

Earnings

Walmart announced its earnings results on Tuesday, showing that the company benefited significantly from the pandemic. The company saw a 79% jump in revenue from its internet platform as its revenue grew 5.2% to $134.7 billion between July and October. Walmart hired more than half a million new employees this year.

“We’re convinced that most of the behaviour change will persist beyond the pandemic and that our combination of strong stores and emerging digital capabilities will be a winning formula,” he told investors on an earnings call. “Customers will want to be served in a variety of ways and we’re positioned to save them money, provide a variety of product choices they’re looking for, and deliver the experience they choose at the moment.”

Nvidia, the American technology group with a market capitalization of more than 330 billion dollars, unveiled on Wednesday better than expected earnings. The company posted a 49% increase in net income and revenues jumped 57% to $4.73 billion, beating analysts’ expectations of $4.41 billion. Its computer and networking division grew 146% from a year ago, reaching a total of $1.94 billion. Nvidia also took advantage of the lockdown to increase its activities related to the video game sector. This division’s revenue increased 37% year-on-year to $2.3 billion in the third quarter. However, the company said its data centre chip sales would decline slightly in the current quarter, causing revenue to drop. This news disappointed investors, the stock finished Thursday’s session down 0.09%. Nvidia’s stock has accumulated gains of 128% since the beginning of the year.

 

 

Pratte Portfolio Management is a firm registered with the Autorité des marchés financiers (AMF) and the Ontario Securities Commission (OSC).

Intended to provide general information about markets and securities and not to meet your specific needs, this report is the result of the author’s only work. The opinions (including any recommendations, if any) expressed in this report are those of the author only and do not necessarily represent those of Pratte Portfolio Management and do not constitute securities investment advisory activities designed to meet your specific needs.

The information contained in this report is derived from sources believed to be reliable, but the accuracy and completeness of this information can not be guaranteed and, in providing the information, the author and Pratte Portfolio Management assume no liability whatsoever. This information was current as of the date indicated in this bulletin, and neither the author nor Pratte Portfolio Management assumes any obligation to update it or to report any new developments with respect to this information. This report is intended for distribution in jurisdictions where the author and Pratte Portfolio Management are registered for trading in securities. Any distribution or diffusion of this report in another territory is forbidden. The author, Pratte Portfolio Management, its affiliates and their respective directors, officers and employees, and the companies with which they are associated may, from time to time, hold securities referred to in this report. 

Blogue

Vous voulez devenir client?

CONTACTEZ-NOUS